In This Section
Loan Loss Provision 
A loan loss provision is an expense set aside as an allowance for uncollected loans and loan payments.
Zero Balance Account (ZBA)
A zero balance account, also referred to as a ZBA, is a checking account which always maintains a balance of zero funds at day end. The account is automatically funded from another account in an amount only large enough to cover checks presented.
Yield to Maturity (YTM)
Yield to Maturity (YTM) is the total return anticipated on a bond if the bond is held until the end of its lifetime.
Yield
Yield is the income return on an investment, usually expressed as an annual percentage rate. With regards to a loan, the yield would be all the interest, fees, and other charges during the life of the loan.
Working Capital Cycle
The amount of time it takes to turn the net current assets and current liabilities into cash.
Working Capital
Working capital is defined as Current Assets minus Current Liabilities. The key components of the working capital equation are accounts receivable (current asset), inventory (current asset), and accounts payable (current liability).
Work in Process (WIP)
Work in process inventory, often referred to as WIP, represents inventory that is in the production process.
Wholesale Price
Wholesale price is the cost of the goods sold by a wholesaler. The wholesaler will charge a price higher than it paid to the producer of the goods when it sells to the retailer. Retailers will purchase the goods from a wholesaler and increase the price further when sold to the end consumer.
Weighted Average Cost of Capital (WACC)
Weighted Average Cost of Capital, often referred to as WACC, is a calculation of a company's cost of capital with each category of capital (i.e. debt and equity) proportionally weighted. A company with a higher proportion of equity to debt will have a higher WACC given that equity is more expensive than debt. WACC is often used as the rate when discounting cash flows.
Waterfall
Waterfall is a common term used when describing the order of payouts based on the capital structure. The 1st lien senior secured debt is paid out first and thus is considered at the top of the waterfall. Second lien or junior secured debt would be paid next followed by unsecured debt and finally equity.
Warranty
A warranty is a type of guarantee that a manufacturer or similar party makes regarding the condition of its product upon the sale of the product. It also refers to the terms and situations in which repairs or exchanges can be made in the event the product does not perform as intended.
Warrant
A warrant is a security that gives the owner the right, but not the obligation, to buy or sell a security, most commonly equity, at a certain price before expiration. Riskier loans will sometimes have warrants attached to them that allows the lender the right to purchase equity based on negotiated terms and benchmarks.
Warehouse Lien Waiver
A warehouse lien waiver is a legal document used when a borrower has assets (i.e. inventory) held offsite. The agreement typically states that the owner of the warehouse waives any of its potential lien rights against these assets including any offsets for past due payables.
Voting Rights
Voting rights refer to the amount of required lenders needed to approve changes to a multi-bank credit agreement. These can vary by deal but often are based on >50% of commitments.
Voluntary Bankruptcy Filing
A voluntary bankruptcy filing occurs when a company files a bankruptcy petition (most often Chapter 11 or Chapter 7) before it is forced into bankruptcy by the legal action of its creditors.
Voidable Preference
A voidable preference (also called an "unfair preference") is a legal term arising in bankruptcy law where a person or company transfers assets or pays a debt to a creditor shortly before going into bankruptcy.
Variable Cost
A variable cost is a cost that changes in relation to production volume. As production volumes increase, so will variable costs. As production volumes decrease, so will variable costs.
Usury
Usury refers to interest rates that are significantly above current market rates. These are often higher than the rates allowed by law and are often charged by unsecured lenders.
Useful Life
Useful Life is the estimated lifespan of a depreciable fixed asset, during which it can be expected to contribute to company operations.
Unused Line Fee
Also known as a commitment fee, an unused line fee is a banking term used to describe a fee charged by a lender to a borrower to compensate the lender for its commitment to lend.